Interim Results
Witan Investment Trust PLC
03 August 2005
WITAN INVESTMENT TRUST PLC
3 August 2005
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Financial Highlights
(Unaudited)
Half year ended (Unaudited) (Audited)
30 June 2005 Half year ended Year ended
in pence 30 June 2004 31 December 2004
in pence in pence
Share price 363.25 302.5 331.5
Net asset value per ordinary
share (notes 1 and 2) 405.3 364.6 384.4
Revenue earnings per ordinary share
(note 2) 5.15 5.12 8.65
Dividends per ordinary share 3.80 3.70 8.60
Notes:
1. The net asset value per ordinary share shown above is calculated by
deducting from the net assets less current liabilities of the Group the
preference shares, the debenture stock and the secured bonds (together 'the
prior charges') at their market (or fair) values rather than at their par (or
book) values, as is now regarded as best practice. The financial statements on
pages 4 to 23 are prepared using their par values, in accordance with IFRS.
Because in aggregate the market values of the prior charges are more than their
par values, the net asset value per ordinary share shown above is less than that
shown on page 6.
2. The 30 June 2004 and 31 December 2004 figures are restated, in accordance
with IFRS. See note 2 on pages 12 and 13.
3. The percentage returns shown below are based on figures for the net asset
value per share as at the relevant dates, sourced from the Association of
Investment Trust Companies. Figures calculated in accordance with IFRS are
not available for the three year period.
Performance
Capital returns to 30 June 2005
6 months 12 months 36 months
% return % return % return
Share price 9.6 20.1 3.0
Net asset value per ordinary 6.8
share (note 3 above) 5.7 12.5
FTSE All-Share Index 6.2 14.9 13.1
FTSE World (ex UK) Index 5.8 10.3 9.4
Dividend
An interim dividend of 3.80p (2004: 3.70p) per ordinary share will be paid on 9
September 2005 to shareholders registered on 19 August 2005. The shares will be
quoted ex-dividend on 17 August 2005.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 2 of 25
Extracts from the Chairman's Statement:
The Witan share price has risen by a little over 15% between 31 December 2004
and 31 July 2005. Two factors have driven this performance: a continued rise in
most world markets, and the Board's commitment to buying back Witan shares in
order to bring down the discount.
Economic activity at home may be disappointing but many overseas economies are
continuing to surprise pleasantly. Last year we increased our overseas exposure
at the expense of the UK to reflect this outlook. Markets have been rising for
over two years and therefore your Board decided at the end of March to make a
modest reduction in the level of gearing. As I have said, the Company has
continued to buy back its own shares. This process added approximately 0.8% to
the net asset value per share during the half year under review and the discount
fell over the period to 10.4%.
The Board has increased the interim dividend from 3.70p to 3.80p per ordinary
share, in line with inflation.
In February the board of F & C Pacific Investment Trust PLC announced the
appointment of Witan as Executive Manager of its new multi-manager structure,
together with a change of name to Witan Pacific Investment Trust PLC. This is a
clear endorsement of both Witan's expertise and its multi-manager structure.
This relationship, combined with your Board's decision to take full
responsibility for the marketing of the Witan brand, has necessitated the
setting up of a new wholly-owned subsidiary, Witan Investment Services Limited.
The Board is prepared to look at ways to develop the subsidiary but will only do
so if it is in shareholders' interests.
New Accounting Standards
Many quoted companies in the UK and abroad are now adopting new accounting
standards ('International Financial Reporting Standards' or 'IFRS'), which have
been developed to lead to more internationally consistent accounting treatment
and terminology. These half-year accounts of Witan reflect the new standards,
and the full year audited accounts will also do so, although the application of
IFRS to investment trust companies may continue to evolve further in the
meantime.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 3 of 25
Extracts from the Chief Executive Officer's Statement
The net asset value per share of the Trust rose a respectable 5.7% in the six
months to 30 June 2005. Since the inception of the new regime (at the end of
September 2004) the net asset value performance is 0.7% ahead of the benchmark,
despite some slippage in April and May.
A breakdown of the individual fund managers' performance over the six months to
end June is shown in the table below. Your Board believes it is too early to
make any judgements on the fund managers. Given the active managers' investment
styles, it was expected that there would be significant departures from the
benchmark indices. In the long-term your Board hopes and expects that these
deviations will prove to be positive, although clearly over shorter periods they
can go in both directions.
In summary, the Board remains confident that the stock picking skills of Witan's
investment management team will be clearly reflected in the Trust's performance
in the future.
Performance of the Investment Managers
for the period 31 December 2004 to 30 June 2005
Value of Funds
under
Management % of Witan's Performance in Benchmark
Assets under the period Performance
£m at 30.06.05 Management at 31.12.04 to 31.12.04 to
30.06.05* 30.06.05 30.06.05
Investment Manager Equity Mandate
Henderson Global UK mainstream equities
Investors 510.3 39.7 +8.4 +8.2
Henderson Global
Investors UK smaller companies 67.1 5.2 +5.8 +8.4
Southeastern Asset
Management Global 193.7 15.1 +5.0 +7.4
MFS International Global 126.9 9.9 +5.1 +7.4
Wellington Management
Company Continental Europe 128.3 10.0 +4.7 +6.7
Henderson Global
Investors USA 130.8 10.1 +7.7 +7.6
Brandes Investment
Partners Japan 63.0 4.9 +4.8 +1.4
APS Asset Management Asia Pacific
(ex Japan) 65.5 5.1 +7.8 +13.2
* excluding cash balances and unquoted investments held centrally in Witan.
Source: The WM Company
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 4 of 25
Consolidated Income Statement
(Unaudited) (Audited)
(Unaudited) Half year ended Year ended
Half year ended
30 June 2004 31 December 2004
30 June 2005
Restated (see note 9) Restated (see note 8)
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment income 20,485 - 20,485 20,240 - 20,240 34,373 - 34,373
Other income 1,958 - 1,958 1,290 - 1,290 3,018 - 3,018
Gains on investments held at - 68,302 68,302 - 16,853 16,853 - 103,778 103,778
fair value
------------------------------------------------------------------------------------------
22,443 68,302 90,745 21,530 16,853 38,383 37,391 103,778 141,169
------------------------------------------------------------------------------------------
Expenses
Management fees (257) (539) (796) (563) (1,686) (2,249) (933) (3,523) (4,456)
Other expenses (2,086) (1,685) (3,771) (1,607) (585) (2,192) (3,199) (2,913) (6,112)
Finance costs (1,277) (3,831) (5,108) (1,279) (3,836) (5,115) (2,555) (7,681) (10,236)
------------------------------------------------------------------------------------------
(3,620) (6,055) (9,675) (3,449) (6,107) (9,556) (6,687) (14,117) (20,804)
-----------------------------------------------------------------------------------------
Profit before tax 18,823 62,247 81,070 18,081 10,746 28,827 30,704 89,661 120,365
Taxation (2,196) 1,086 (1,110) (680) - (680) (1,312) 154 (1,158)
------------------------------------------------------------------------------------------
Profit for the period 16,627 63,333 79,960 17,401 10,746 28,147 29,392 89,815 119,207
====== ====== ====== ====== ====== ====== ====== ====== ======
Earnings per ordinary share 24.75p 8.28p 35.09p
(note 2)
====== ====== ======
The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS. The revenue return and capital return columns
are supplementary to this and are prepared under guidance published by the
Association of Investment Trust Companies. All items in the above statement
derive from continuing operations.
All income is attributable to the equity holders of Witan Investment Trust plc,
the parent company. There are no minority interests.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 5 of 25
Consolidated Statement of Changes in Equity
(Unaudited)
Half year ended 30 June 2005
Ordinary share Share premium Redemption Retained
capital reserve earnings Total
£'000 £'000 £'000 £'000 £'000
Balance at 31 December 2004 84,736 16,237 9,090 1,212,576 1,322,639
Profit for the period - - - 79,960 79,960
Ordinary dividend paid - - - (16,105) (16,105)
Buy-backs of ordinary shares (note 3) (6,933) - 6,933 (97,926) (97,926)
------------ ------------ ------------ ------------ ------------
Balance at 30 June 2005 77,803 16,237 16,023 1,178,505 1,288,568
======= ======= ======= ======= =======
(Unaudited)
Half year ended 30 June 2004
Restated (see note 9)
Ordinary share Share Redemption Retained
capital premium reserve earnings Total
£'000 £'000 £'000 £'000 £'000
Balance at 31 December 2003 85,880 16,237 7,946 1,135,516 1,245,579
Profit for the period - - - 28,147 28,147
Ordinary dividend paid - - - (15,616) (15,616)
Buy-backs of ordinary shares (note 3) (1,000) - 1,000 (12,101) (12,101)
----------- ----------- ----------- ------------- -------------
Balance at 30 June 2004 84,880 16,237 8,946 1,135,946 1,246,009
======= ======= ======= ======= =======
(Audited)
Year ended 31 December 2004
Restated (see note 8)
Ordinary share Share premium Redemption Retained
capital reserve earnings Total
£'000 £'000 £'000 £'000 £'000
Balance at 31 December 2003 85,880 16,237 7,946 1,135,516 1,245,579
Profit for the period - - - 119,207 119,207
Ordinary dividend paid - - - (28,181) (28,181)
Buy-backs of ordinary shares (note 3) (1,144) - 1,144 (13,966) (13,966)
----------- ----------- ----------- ----------- -----------
Balance at 31 December 2004 84,736 16,237 9,090 1,212,576 1,322,639
======= ======= ======= ======= =======
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 6 of 25
Consolidated Balance Sheet
(Unaudited) (Audited)
As at As at
30 June 2004 31 December
2004
(Unaudited) Restated Restated
As at (see note 9) (see note 8)
30 June 2005 £'000 £'000
£'000
Non current assets
Investments held at fair value (note 1 (g)) 1,268,168 1,316,881 1,390,325
------------- ------------- ------------
Current assets
Sales for future settlement 34,931 6,463 9,124
Taxation recoverable 464 285 257
Prepayments and accrued income 3,421 4,431 2,552
Derivatives designated as fair value through profit and 47 - 36
loss
Cash and cash equivalents 147,669 70,964 79,568
------------- ------------- ------------
186,532 82,143 91,537
------------- ------------- ------------
Total assets 1,454,700 1,399,024 1,481,862
======== ======== ========
Current liabilities
Purchases for future settlement 15,029 3,813 9,012
Accruals 4,356 2,314 3,334
Preference dividends payable 38 38 38
------------- ------------- ------------
19,423 6,165 12,384
------------- ------------- -------------
Net assets less current liabilities 1,435,277 1,392,859 1,469,478
Non current liabilities
8 1/2 per cent Debenture Stock 2016 45,779 46,000 45,949
6.125 per cent Secured Bonds due 2025 98,375 98,295 98,335
3.4 per cent cumulative preference shares of £1 2,055 2,055 2,055
2.7 per cent cumulative preference shares of £1 500 500 500
------------- ------------- -------------
146,709 146,850 146,839
------------- ------------- -------------
Net assets 1,288,568 1,246,009 1,322,639
------------- ------------- -------------
Equity
Ordinary share capital 77,803 84,880 84,736
Share premium 16,237 16,237 16,237
Capital redemption reserve 16,023 8,946 9,090
Retained earnings 1,178,505 1,135,946 1,212,576
------------ ------------ ------------
Earnings attributable to equity shareholders and total
equity 1,288,568 1,246,009 1,322,639
======== ======== ========
Net asset value per ordinary share (note 7) 414.0p 367.0p 390.2p
======== ======== ========
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 7 of 25
Consolidated Cash Flow Statement
(Unaudited) (Audited)
Half year ended Year ended
30 June 2004 31 December 2004
(Unaudited)
Half year ended Restated Restated
30 June 2005 (see note 9) (see note 8)
£'000 £'000 £'000
Net cash inflow from operating activities (note 12) 11,838 10,750 19,936
Net cash inflow from investing activities 168,483 32,297 50,699
------------ ------------- -------------
Net cash inflow before financing 180,321 43,047 70,635
Net cash outflow from financing activities (112,753) (27,717) (42,210)
------------ ------------ ------------
Net increase in cash and cash equivalents 67,568 15,330 28,425
Cash and cash equivalents at the start of the period 79,568 56,435 56,435
Realised gains/(losses) on foreign currency 533 (801) (5,292)
------------ ------------ ------------
Cash and cash equivalents at the period end 147,669 70,964 79,568
======= ====== ======
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 8 of 25
Notes to the Financial Statements
1 Accounting policies
The financial statements of the Group have been prepared in accordance with International
Financial Reporting Standards ('IFRS'). These comprise standards and interpretations approved by
the International Accounting Standards Board ('IASB'), together with interpretations of the
International Accounting Standards and Standing Interpretations Committee approved by the
International Accounting Standards Committee ('IASC') that remain in effect, to the extent that
IFRS have been adopted by the European Union.
The disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS are given in
notes 8, 9 and 10. These financial statements are presented in pounds sterling because that is the
currency of the primary economic environment in which the Group operates. The financial statements
of the Group for the year ending 31 December 2005 will also be prepared in accordance with IFRS.
(a) Basis of preparation
The financial statements have been prepared on the historical cost basis, except for the
revaluation of certain financial instruments. The principal accounting policies adopted are
set out below. Where presentational guidance set out in the Statement of Recommended
Practice ('the SORP') for investment trusts issued by the Association of Investment Trust
Companies ('the AITC') in January 2003 is consistent with the requirements of IFRS, the
directors have sought to prepare the financial statements on a basis compliant with the
recommendations of the SORP.
(b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company
and entities controlled by the Company (its subsidiaries) made up to 31 December each year.
Control is achieved where the Company has the power to govern the financial and operating
policies of an investee entity so as to obtain benefits from its activities. All intra-group
transactions, balances, income and expenses are eliminated on consolidation.
(c) Presentation of income statement
In order to better reflect the activities of an investment trust company, and in accordance
with guidance issued by the AITC, supplementary information which analyses the Income
Statement between items of a revenue and capital nature has been presented alongside the
Income Statement. In accordance with the Company's status as a UK investment company under
section 266 of the Companies Act 1985, net capital returns may not be distributed by way of
dividend. Additionally, the net revenue is the measure the directors believe appropriate in
assessing the Group's compliance with certain requirements set out in section 842 of the
Income and Corporation Taxes Act 1988.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 9 of 25
(d) Income
Dividends receivable on equity shares are recognised as revenue for the year on an
ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or
before the year end are treated as revenue for the year. Provision is made for any
dividends not expected to be received. The fixed returns on debt securities and non-equity
shares are recognised on a time apportionment basis so as to reflect the effective yield
on the debt securities and shares. Interest receivable from cash and short term deposits
is accrued to the end of the period.
(e) Expenses
All expenses and interest payable are accounted for on an accruals basis. An analysis of
retained earnings broken down into revenue (distributable) items and capital
(non-distributable) items is given in note 6. In arriving at this breakdown, expenses have
been presented as revenue items except as follows:
- the expenses of acquisition of an investment are recognised within capital as an
expense item;
- the expenses of disposal of an investment are deducted from the disposal proceeds of
the investment;
- expenses are presented as capital where a connection with the maintenance or
enhancement of the value of the investments can be demonstrated. In this respect
the investment management fees and finance costs are allocated 25% to revenue and
75% to capital to reflect the Board's expectations of long term investment returns;
- any performance fees payable are allocated wholly to capital, reflecting the fact
that, although they are calculated on a total return basis, they are expected to be
attributable largely, if not wholly, to capital performance.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 10 of 25
(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the taxable profit for the period. Taxable profit differs
from net profit as reported in the Income Statement because it excludes items of income or
expense that are taxable or deductible in other years and it further excludes items that are
never taxable or deductible. The Group's liability for current tax is calculated using tax
rates that were applicable at the balance sheet date.
In line with the recommendations of the SORP, the allocation method used to calculate tax
relief on expenses presented against capital returns in the supplementary information in the
Income Statement is the 'marginal basis'. Under this basis, if taxable income is capable of
being offset entirely by expenses presented in the revenue return column of the Income
Statement, then no tax relief is transferred to the capital return column.
Deferred tax is the tax expected to be payable or recoverable on differences between the
carrying amounts of assets and liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences can be
utilised. Investment trusts which have approval as such under section 842 of the Income and
Corporation Taxes Act 1988 are not liable for taxation on capital gains.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the
liability is settled or the asset is realised. Deferred tax is charged or credited in the
Income Statement, except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 11 of 25
(g) Investments
When a purchase or sale is made under contract, the terms of which require delivery within the
timeframe of the relevant market, the investments concerned are recognised or derecognised on
the trade date.
All the Group's investments are defined by IFRS as investments designated as fair value through
profit and loss but are also described in these financial statements as investments held at
fair value.
All investments are designated upon initial recognition as held at fair value, and are measured
at subsequent reporting dates at fair value, which is either the bid price or the last traded
price, depending on the convention of the exchange on which the investment is quoted.
Investments in unit trusts or OEICs are valued at the closing price, the bid price or the
single price as appropriate, released by the relevant investment manager. Fair value for
unquoted investments, or for investments for which there is only an inactive market, are
established by using various valuation techniques. These may include recent arm's length
market transactions, the current fair value of another instrument that is substantially the
same, discounted cash flow analysis and option pricing models. Where there is a valuation
technique commonly used by market participants to price the instrument and that technique has
been demonstrated to provide reliable estimates of prices obtained in actual market
transactions, that technique is utilised. Where no reliable fair value can be estimated for
such instruments, they are carried at cost, subject to any provision for impairment.
(h) Movements in fair value
Changes in the fair value of all investments held at fair value are recognised in the Income
Statement.
On disposal, realised gains and losses are also recognised in the Income Statement.
(i) Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash and that are subject to an
insignificant risk of changes in value.
(j) Dividends payable
Interim and final dividends are recognised in the period in which they are declared.
(k) Non-current liabilities
All loans, debentures and secured bonds are initially recognised at cost, being the fair value
of the consideration received, less issue costs where applicable. After initial recognition,
all interest-bearing loans and borrowings are subsequently measured at amortised cost.
Amortised cost is calculated by taking into account any discount or premium on settlement. The
costs of arranging any interest-bearing loans are capitalised and amortised over the life of
the loan.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 12 of 25
(l) Foreign currency translation
Transactions involving foreign currencies are converted at the rate ruling at the date of the
transaction.
Foreign currency monetary assets and liabilities are translated into sterling at the rate
ruling on the balance sheet date. Foreign exchange differences arising on translation are
recognised in the Income Statement.
(m) Derivative financial instruments
The Group's activities expose it primarily to the financial risks of changes in market prices,
foreign currency exchange rates and interest rates.
Derivative transactions which the Company may enter into compromise forward exchange contracts
(the purpose of which is to manage currency risks arising from the Company's investing
activities), quoted options on shares held within the portfolio, or on indices appropriate to
sections of the portfolio (the purpose of which is to provide protection against falls in the
capital values of the holdings) and future contracts on indices appropriate to sections of the
portfolio (the purpose of which is to provide protection against falls in the capital values of
the holdings). The Company may also write options on shares represented in the portfolio where
such options are priced attractively relative to the portfolio managers' longer term
expectations to the relevant share prices. The Group does not use derivative financial
instruments for speculative purposes.
The use of financial derivatives is governed by the Group's policies as approved by the Board,
which has set written principles for the use of financial derivatives.
Changes in the fair value of derivative financial instruments that do not qualify for hedge
accounting are recognised in the Income Statement as they arise. If capital in nature, the
associated change in value is presented as a capital item in the Income Statement.
2 Earnings per ordinary share
The earnings per ordinary share figure is based on the net gain for the half year of £79,960,000 (half
year ended 30 June 2004: £28,147,000; year ended 31 December 2004: £119,207,000) and on 323,011,148
(half year ended 30 June 2004: 339,983,536; year ended 31 December 2004: 339,685,587) ordinary shares,
being the weighted average number of ordinary shares in issue during the period.
The earnings per ordinary share figure detailed above can be further analysed between revenue and
capital, as below.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 13 of 25
(Unaudited)
Half year ended (Audited)
(Unaudited) 30 June Year ended
Half year ended 2004 31 December 2004
30 June Restated Restated
2005 (see note 9) (see note 8)
£'000 £'000 £'000
Net revenue profit 16,627 17,401 29,392
Net capital profit 63,333 10,746 89,815
---------- --------- -----------
Net total profit 79,960 28,147 119,207
====== ====== ======
Weighted average number of
ordinary shares in issue during
the period 323,011,148 339,983,536 339,685,587
pence pence pence
Revenue earnings per ordinary share 5.15 5.12 8.65
Capital earnings per ordinary share 19.60 3.16 26.44
--------- --------- ---------
Total earnings per ordinary share 24.75 8.28 35.09
===== ===== =====
3 Ordinary share capital
At 30 June 2005 there were 311,211,679 ordinary shares in issue (30 June 2004: 339,518,086; 31
December 2004: 338,944,785). During the half year ended 30 June 2005 the Company bought 27,733,106
of its own issued ordinary shares in the market for cancellation (half year ended 30 June 2004:
4,000,000; year ended 31 December 2004: 4,573,301). The cost of the share buy-backs, including
stamp duty, amounted to £97,926,000 (half year ended 30 June 2004: £12,101,000; year ended 31
December 2004: £13,966,000).
4 Interim dividend
The directors have declared an interim dividend of 3.80p (2004: 3.70p) per ordinary share, payable on
9 September 2005 to shareholders registered on 19 August 2005. The shares will be quoted ex-dividend
on 17 August 2005.
5 Comparative Information
The financial information contained in this interim report does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. The financial information for the half years ended
30 June 2005 and 30 June 2004 has not been audited.
The information for the year ended 31 December 2004 has been extracted from the latest published
audited financial statements, as restated to comply with IFRS (see note 8). The audited financial
statements for the year ended 31 December 2004 have been filed with the Registrar of Companies. The
report of the auditors on those accounts contained no qualification or statement under section 237(2)
or (3) of the Companies Act 1985.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 14 of 25
6 Retained earnings
The table below shows the movement in the retained earnings analysed between revenue
and capital items.
Revenue Capital Total
£'000 £'000 £'000
At 1 January 2005 (as
restated) 42,280 1,170,296 1,212,576
Movement during the period:
Net income for the period 16,627 63,333 79,960
Buy-backs of ordinary shares - (97,926) (97,926)
Dividends paid: ordinary
shares (16,105) - (16,105)
---------- ------------ ------------
At 30 June 2005 42,802 1,135,703 1,178,505
====== ======= =======
The final dividend accrued in respect of the year ended 31 December 2004, at
4.90p per share, amounted to £16,608,000. The buy-backs of the Company's
shares, after 31 December 2004 but before the record date of the final dividend,
resulted in a write-back of dividends accrued in respect of the year but not in
the event payable. The figure for the dividends paid is net of this write-back.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 15 of 25
7 Net asset value per ordinary share
The net asset value per ordinary share is based on the net assets attributable to the equity
shareholders of £1,288,568,000 (half year ended 30 June 2004: £1,246,009,000 as restated; year ended
31 December 2004: £1,322,639,000 as restated) and on 311,211,679 (half year ended 30 June 2004:
339,518,086; year ended 31 December 2004: 338,944,785) ordinary shares, being the number of ordinary
shares in issue at the period end.
8 (a) Restatement of balances as at and for the year ended 31 December 2004
At 1 January 2005 the Company adopted International Financial Reporting Standards. In
accordance with IFRS 1 (First Time Adoption of International Financial Reporting Standards) the
following is a reconciliation of the results as at and for the year ended 31 December 2004,
previously reported under the applicable UK Accounting Standards and the SORP, to the restated
IFRS results.
(Audited)
Previously
reported Effect of Restated
transition to
31 December IFRS 31 December
2004 £'000 2004
Notes £'000 £'000
Investments 1 1,395,468 (5,143) 1,390,325
Current assets 1 91,501 36 91,537
Creditors: amounts falling due
within one year 1,2 (33,210) 20,826 (12,384)
------------ ------------
Total assets less current
liabilities 1,453,759 1,469,478
Creditors: amounts falling due
after more than one year 4 (144,284) (2,555) (146,839)
------------ ------------
1,309,475 1,322,639
======= =======
Capital and reserves
Called up share capital:
Preference shares 4 2,555 (2,555) -
Ordinary shares 84,736 - 84,736
Share premium 16,237 - 16,237
Capital redemption reserve 9,090 - 9,090
Capital reserve - realised 3 990,586 (990,586) -
Capital reserve - unrealised/
revaluation reserve 3 180,599 (180,599) -
Revenue reserve/Retained
earnings 1,2,3 25,672 1,186,904 1,212,576
------------ ------------
1,309,475 1,322,639
======= =======
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 16 of 25
Notes to the reconciliation
1. Investments (excluding derivatives) are designated as held at fair value under IFRS and are carried at
bid prices which total their fair value of £1,390,325,000. Previously, under UK GAAP they were carried
at mid prices. The aggregate differences, being a revaluation downwards of £889,000, also decrease
retained earnings. Derivatives have been designated as fair value through profit and loss. The
unrealised gain of £36,000 has been re-analysed under net current assets. Previously the gross
derivatives position was analysed as an asset of £4,254,000 within investments and a current liability
of £4,218,000.
2. No provision has been made for the final dividend on the ordinary shares for the year ended 31
December 2004 of £16,608,000. Under IFRS the final dividend is not recognised until approved by the
shareholders.
The treatment of the current liability of £4,218,000 in respect of the derivatives position is
explained in note 1 above.
3. Under IFRS, there is no differentiation between capital and revenue gains/losses. The previous
headings of Capital reserve - realised and Capital reserve - unrealised are now included under the
heading Retained earnings.
4. Under IFRS the Company's preference shares are classified as debt.
(b) Reconciliation of the Statement of Total Return to the Income Statement for the year ended 31
December 2004
Under IFRS the Income Statement is the equivalent of the Statement of Total Return reported
previously.
2004 EPS impact
Notes £'000 in pence
Total transfer to reserves per the Statement of
Total Return 90,502 -
Add back dividends paid and proposed 1 28,987 -
Investments held at fair value
changed from mid to bid basis at 31 607 0.18
December 2004
Investments held at fair value
changed from mid to bid basis at 31 2 (889) (0.26)
December 2004
---------- ---------
Net profit per the Income Statement 119,207 (0.08)
====== =====
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 17 of 25
8 Restatement of balances as at and for the year ended 31 December 2004 (continued)
Notes to the reconciliation
1. Ordinary dividends declared and paid during the period are dealt with through the Statement
of Changes in Equity. Preference dividends are categorised as finance costs and as such are
dealt with through the Income Statement.
2. The portfolio valuations at 31 December 2003 and 31 December 2004 are required to be valued
at fair value under IFRS. These values differ from the previous valuations by £607,000 and
£889,000 respectively.
(c) Reconciliation of the Cash Flow Statement for the year ended 31 December 2004
(Audited)
Previously Adjusted
reported Effect of cash flows
cash flows transition to 2004
IFRS
2004 £'000
£'000
Notes £'000
Net cash inflow from operating activities 1 29,976 (10,040) 19,936
Returns on investments and servicing of
finance 1 (10,145) 10,145 -
Taxation 1 105 (105) -
Net cash inflow from financial investment 50,699 - 50,699
Equity dividends paid 2 (28,180) 28,180 -
Cash placed on/withdrawn from deposit 3 40,000 (40,000) -
---------- ----------- ---------
Net cash inflow before financing 82,455 (11,820) 70,635
Financing 2 (14,030) (28,180) (42,210)
---------- ----------- ----------
Increase in cash 68,425 (40,000) 28,425
====== ====== ======
Notes to the reconciliation
1. Bank, debenture and secured bond interest, preference dividends and taxation have now been
analysed within operating activities.
2. Ordinary dividends paid are now analysed within financing.
3. Term deposits are now classified within cash and cash equivalents.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 18 of 25
9 (a) Restatement of balances as at and for the period ended 30 June 2004
At 1 January 2005 the Company adopted International Financial Reporting Standards. In
accordance with IFRS 1 (First Time Adoption of International Financial Reporting
Standards) the following is a reconciliation of the results as at and for the period
ended 30 June 2004, previously reported under the applicable UK Accounting Standards and
with the SORP, to the restated IFRS results.
(Unaudited)
Previously
reported Effect of Restated
transition to
30 June 30 June
IFRS
2004 2004
£'000
Notes £'000 £'000
Investments 1 1,317,458 (577) 1,316,881
Current assets 82,143 - 82,143
Creditors: amounts falling due
within one year 2 (18,729) 12,564 (6,165)
------------ ------------
Total assets less current
liabilities 1,380,872 1,392,859
Creditors: amounts falling due
after more than one year 4 (144,295) (2,555) (146,850)
------------ ------------
1,236,577 1,246,009
======= =======
Capital and reserves
Called up share capital:
Preference shares 4 2,555 (2,555) -
Ordinary shares 84,880 - 84,880
Share premium 16,237 - 16,237
Capital redemption reserve 8,946 - 8,946
Capital reserve - realised 3 908,453 (908,453) -
Capital reserve - unrealised/
revaluation reserve 3 185,185 (185,185) -
Revenue reserve/Retained
earnings 1,2,3 30,321 1,105,625 1,135,946
----------- ------------
1,236,577 1,246,009
======= =======
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 19 of 25
9 Restatement of balances as at and for the period ended 30 June 2004 (continued)
Notes to the reconciliation
1. Investments are designated as held at fair value under IFRS and are carried at bid prices
which equate to their fair value of £1,316,881,000. Previously, under UK GAAP, they were
carried at mid prices. The resultant aggregate differences, being a revaluation downwards of
£577,000, also decrease retaining earnings.
2. No provision has been made for the interim dividend on the ordinary shares for the period
ended 30 June 2004 of £12,564,000 as this was not declared until after the balance sheet
date. Under IFRS, the interim dividend is not recognised until declared.
3. Under IFRS, there is no differentiation between capital and revenue gains/losses. The
previous headings of Capital reserve - realised and Capital reserve - unrealised are now
included under the heading Retained earnings.
4. Under IFRS the Company's preference shares are classified as debt.
(b) Reconciliation of the Statement of Total Return to the Income Statement for the period
ended 30 June 2004
Under IFRS the Income Statement is the equivalent of the Statement of Total Return reported
previously.
EPS impact
2004 in pence
Notes £'000
Total transfer to reserves per the Statement of Total
Return 15,739 -
Add back dividends paid and proposed 1 12,378 -
Investments held at fair value changed from mid
to bid basis on 31 December 2003 2 607 0.18
Investments held at fair value changed from mid
to bid basis at 30 June 2004 2 (577) (0.17)
--------- ---------
Net profit per the Income Statement 28,147 0.01
===== =====
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 20 of 25
9 Restatement of balances as at and for the period ended 30 June 2004 (continued)
Notes to the reconciliation
1. Ordinary dividends declared and paid during the period are dealt with through the Statement
of Changes in Equity. Preference dividends are categorised in finance costs and as such dealt
with through the Income Statement.
2. The portfolio valuations at 31 December 2003 and 30 June 2004 are required to be valued at
fair value under IFRS. These values are lower than the previous valuations by £607,000 and
£577,000 respectively.
(c) Reconciliation of the Cash Flow Statement for the period ended 30 June 2004
(Unaudited)
Previously
reported cash
flows Effect of Adjusted cash
transition to flows
2004 IFRS
2004
£'000 £'000 £'000
Notes
Net cash inflow from operating
activities 1 15,795 (5,045) 10,750
Returns on investments and
servicing of finance 1 (5,076) 5,076 -
Taxation 1 31 (31) -
Net cash inflow from financial
investment 32,297 - 32,297
Equity dividends paid 2 (15,616) 15,616 -
Cash placed on/withdrawn
from deposit 3 (10,000) 10,000 -
----------- ---------- ----------
Net cash inflow before
financing 17,431 25,616 43,047
Financing 2 (12,101) (15,616) (27,717)
----------- ---------- -----------
Increase in cash 5,330 10,000 15,330
======= ====== ======
Notes to the reconciliation
1. Bank, debenture and secured bond interest, preference dividends and taxation have now been
analysed within operating activities.
2. Ordinary dividends paid are now analysed within financing.
3. Term deposits are now classified within cash and cash equivalents.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 21 of 25
10 Restatement of opening balances as at 31 December 2003
At 1 January 2005 the Company adopted International Financial Reporting Standards.
In accordance with IFRS 1 (First Time Adoption of International Financial Reporting Standards) the
following is a reconciliation of the results as at and for the year ended 31 December 2003,
previously reported under the applicable UK Accounting Standards and with the SORP, to the restated
IFRS results.
(Audited)
Previously
reported Effect of Restated
transition to
31 December IFRS 31 December
2003 £'000 2003
Notes £'000 £'000
Investments 1 1,332,707 (607) 1,332,100
Current assets 63,237 - 63,237
Creditors: amounts falling due
within one year 2 (18,750) 15,802 (2,948)
------------ ------------
Total assets less current
liabilities 1,377,194 1,392,389
Creditors: amounts falling due
after more than one year 4 (144,255) (2,555) (146,810)
------------ ------------
1,232,939 1,245,579
======= =======
Capital and reserves
Called up share capital:
Preference shares 4 2,555 (2,555) -
Ordinary shares 85,880 - 85,880
Share premium 16,237 - 16,237
Capital redemption reserve 7,946 - 7,946
Capital reserve - realised 3 907,689 (907,689) -
Capital reserve - unrealised/ -
revaluation reserve 3 187,303 (187,303)
Revenue reserve/Retained
earnings 1, 2, 3 25,329 1,110,187 1,135,516
------------ ------------
1,232,939 1,245,579
======= =======
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 22 of 25
Notes to the reconciliation
1. Investments are designated as held at fair value under IFRS and are carried at bid prices
which total their fair value of £1,332,100,000. They were carried at mid prices previously
under UK GAAP. The aggregate differences, being a revaluation downwards of £607,000, also
decrease retained earnings.
2. No provision has been made for the final dividend on the ordinary shares for the year ended
31 December 2003 of £15,802,000. Under IFRS this is not recognised until approved by the
shareholders.
3. Under IFRS, there is no differentiation between capital and revenue gains/losses. The
previous headings of Capital reserve - realised and Capital reserve - unrealised are now
included under the heading Retained earnings.
4. Under IFRS the Company's preference shares are classified as debt.
11 Subsidiary undertaking
The Company has an investment in the issued ordinary share capital of its wholly owned subsidiary
undertaking, Witan Investment Services Limited, which was incorporated on 28 October 2004, is
registered in England and Wales and operates in the United Kingdom.
12 Reconciliation of profit before taxation to net cash inflow from operating activities
(Audited)
Year ended
(Unaudited) (Unaudited) 31 December
Half year ended Half year ended 2004
30 June 30 June 2004 Restated
2005 Restated (see note 8)
£'000 (see note 9) £'000
£'000
Profit before taxation 81,070 28,827 120,365
Gains on investments designated
as held at fair value* (66,617) (16,268) (100,865)
(Increase)/decrease in accrued (921) (906) 899
income
Decrease in other debtors 59 37 89
(Decrease)/increase in accruals (477) (278) 557
Tax on overseas income (1,316) (702) (1,142)
Amortisation of debt issue costs 40 40 79
Scrip dividends included in
investment income - - (46)
------------- ------------ ------------
Net cash inflow from operating
activities 11,838 10,750 19,936
======= ======= =======
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 23 of 25
*The gains on investments held at fair value include purchase transaction costs
of £1,685,000 (half year ended 30 June 2004: £585,000; year ended 31 December
2004: £2,913,000). These costs are included within other expenses in the Income
Statement.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 24 of 25
Independent Auditors' Review Report
to the members of Witan Investment Trust plc
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2005 which comprises the consolidated income
statement, consolidated statement of changes in equity, consolidated balance
sheet, consolidated cash flow statement and related notes 1 to 12. We have read
the other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the Company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the Company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone, other
than the Company, for our review work, for this report, or for the conclusions
we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
International Financial Reporting Standards
As disclosed in note 1, the next annual financial statements of the Group will
be prepared in accordance with International Financial Reporting Standards as
adopted for use in the EU. Accordingly, the interim report has been prepared in
accordance with the recognition and measurement criteria of IFRS and the
disclosure requirements of the Listing Rules.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
This is the first year we have been requested by the Company to review the
results for the interim period. As a result, we have not reviewed the
comparative information for the period to 30 June 2004.
WITAN INVESTMENT TRUST PLC
Unaudited Interim Results for the Half Year ended 30 June 2005
Page 25 of 25
Independent Auditors' Review Report (continued)
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2005.
Deloitte & Touche LLP
Chartered Accountants
London
3 August 2005
Notes: A review does not provide assurance on the maintenance and integrity of
the website, including controls used to achieve this, and in particular on
whether any changes may have occurred to the financial information since first
published. These matters are the responsibility of the directors but no control
procedures can provide absolute assurance in this area.
Legislation in the United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other jurisdictions.
- ENDS -
For further information please contact:
Jim Horsburgh
Witan Investment Trust plc
Tel: 020 7818 5609
James Budden
Witan Investment Trust plc
Tel: 020 7818 3121
Eleanor Mitchell
Quill Communications
Tel: 020 7763 6973
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